REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

22/03/2021 18:05

The information contained in this release was correct as at 28 February
2021.  Information on the Company’s up to date net asset values can be
found on the London Stock Exchange Website at:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 28 February 2021 and unaudited.
Performance at month end is calculated on a cum income basis

                      One     Three     One    Three     Five  
                    Month    months    year    years    years  
                         %         %       %        %        % 
 Net asset value       2.7      12.5    27.6     45.0    124.9 
 Share price           2.2      13.3    31.5     66.6    167.2 
 Benchmark*            4.6      14.2    24.9     19.9     58.0 

Sources: BlackRock and Datastream

*With effect from 22 March 2018 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index replaced the Numis Smaller Companies
excluding AIM (excluding Investment Companies) Index as the Company’s
benchmark. The performance of the indices have been blended to reflect this.

 At month end                                                                  
 Net asset value capital only:                                         756.91p 
 Net asset value incl. income:                                         758.62p 
 Share price                                                           765.00p 
 Premium to cum income NAV                                                0.8% 
 Net yield (1):                                                           1.3% 
 Total Gross assets (2):                                               £689.6m 
 Net market exposure as a % of net asset value (3):                     125.3% 
 Ordinary shares in issue (4):                                      90,895,400 
 2020 ongoing charges (excluding performance fees) (5,6):                0.60% 
 2020 ongoing charges ratio (including performance fees) (5,6,7):        1.60% 

1. Calculated using the 2020 interim dividend declared on 23 July 2020 and
paid on 26 August 2020, together with the 2020 final dividend declared on 10
February 2021 and due to be paid on 01 April 2021.

2. Includes current year revenue and excludes gross exposure through contracts
for difference.

3. Long exposure less short exposure as a percentage of net asset value.

4. Excluding 0 shares held in treasury.

5. Calculated as a percentage of average net assets and using expenses,
excluding performance fees and interest costs for the year ended 30 November
2019.

6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum.

7. Effective 1st December 2017 the annual performance fee is calculated using
performance data on an annualised rolling two year basis (previously, one
year) and the maximum annual performance fee payable is effectively reduced to
0.90% of two year rolling average month end gross assets (from 1% of average
annual gross assets over one year). Additionally, the Company now accrues this
fee at a rate of 15% of outperformance (previously 10%). The maximum annual
total management fees (comprising the base management fee of 0.35% and a
potential performance fee of 0.90%) are therefore 1.25% of average month end
gross assets on a two-year rolling basis (from 1.70% of average annual gross
assets).

 Sector Weightings         % of Total Assets 
                                             
 Industrials                            32.0 
 Consumer Services                      22.7 
 Financials                             17.1 
 Consumer Goods                         11.9 
 Health Care                             6.4 
 Technology                              6.2 
 Telecommunications                      3.3 
 Basic Materials                         1.7 
 Net current liabilities                -1.3 
                                       ----- 
 Total                                 100.0 
                                       ===== 
                                             
 Country Weightings        % of Total Assets 
                                             
 United Kingdom                         88.5 
 United States                           7.1 
 France                                  2.0 
 Switzerland                             0.6 
 Australia                               0.6 
 Denmark                                 0.6 
 Netherlands                             0.4 
 Israel                                  0.2 
                                       ----- 
 Total                                 100.0 
                                       ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.20   31.08.20   30.11.20   28.02.21  
                          %          %          %          % 
 Long                 118.6      121.0      120.4      126.8 
 Short                  2.1        2.4        1.9        1.5 
 Gross exposure       120.7      123.4      122.3      128.3 
 Net exposure         116.6      118.6      118.6      125.3 

   

 Ten Largest Investments                              
                                                      
 Company                  % of Total Gross Assets (1) 
                                                      
 Electrocomponents                                3.2 
 Games Workshop                                   3.0 
 Dr Martens                                       2.8 
 YouGov                                           2.7 
 Gamma Communications                             2.7 
 Watches of Switzerland                           2.5 
 Impax Asset Management                           2.3 
 Ergomed                                          2.1 
 Breedon                                          2.1 
 Moonpig Group                                    2.1 

1.These percentages reflect portfolio exposure gained from both the equity
holdings and exposure through contracts for differences where relevant.

Commenting on the markets, Dan Whitestone, representing the Investment Manager
noted:

During February the Company returned 2.7%(1), while its benchmark, the Numis
Smaller Companies plus AIM (excluding Investment Companies) Index, returned
4.6%(1). The long book rose during the month but lagged the benchmark, while
the short book modestly detracted (both on a gross basis).

After a strong start to the month, notably buoyed by the reporting season
where many of our holdings delivered very positive updates, the Company’s
performance then ebbed towards the end of the month as bond yields rose and
growth shares fell back. The rise in sterling weighed on some of our UK listed
businesses that generate a high proportion of their earnings from overseas,
whilst several our short positions continued to squeeze higher. The valuations
of many shares currently in vogue in the “reopening trade” continues to
perplex us considering the high multiple of full year 2019 profits many now
trade on, in addition to rising debts and share counts, but we have maintained
our discipline over position sizing. Conversely many growth shares have
de-rated in the month, especially after big profit upgrades, and so now look
incredibly attractive to us. Therefore, February has proved an opportunity to
add to positions.

As mentioned, results season has generally been very supportive of our
investment cases. Many of the top contributors for the month are in response
to strong specific updates. The largest contributor was MoonPig, which
followed its successful IPO (Initial Public Offering) with a strong trading
update at the end of the month revealing continued growth in all key revenue
drivers: customer growth, order frequency and order value. We have continued
to add to the position. Electrocomponents also delivered a strong update as
the recovery in their end markets and their ongoing share gains is powering
accelerated growth. Shares in Ergomed continued to push higher following its
January trading update which highlighted positive trading in its
pharmacovigilance and its Clinical Research Organisation, which continued into
year end and as a result 2020 full year earnings will be ahead of
expectations.

Encouragingly, there were no negative stock specific news flow which drove the
largest detractors during the month, so the underlying cause was the ongoing
rotation away from growth shares that had performed well into reopening
beneficiaries, regardless of the underlying businesses fundamentals. This is
evidenced with the three largest detractors, namely Games Workshop, Gamma
Communications and IntegraFin, which we think have only suffered in the very
short-term for no other reason than they’ve been such great performers to
date so have succumbed to some profit taking. The fundamentals for all three
remain very strong and we retain high conviction in these positions.

There has been much discussion about rising bond yields and rising discount
rates for equities. We maintain our view that any rise in inflation will be
tolerated by central bankers so we do not expect material rises in policy
rates. To the extent that rising long-term yields in bond markets start to
impinge on recovery prospects we would expect central banks to intervene – a
message that has already started to seep out. Consequently, we don’t expect
higher rates to be an enduring phenomenon. Perhaps more importantly, there is
nothing we’ve seen to make us change course or lose conviction in our
investment cases, and for the most part trading and outlooks were extremely
strong through the fourth quarter results. The recent market wobble has
allowed us to add to these holdings at good prices. Many of our UK growth
companies, both domestic and international, have now de-rated in February
given a higher profit outlook while investors have sought out reopening plays
instead. This has created some really attractive price dislocations, enabling
us to continue to add to the likes of Gamma Communications, Games Workshop and
Pets At Home.

We think the portfolio is in great shape and are positive on positioning. We
have been busy engaging with the management teams of our investments during
results season and engaging with several upcoming IPOs. Our main takeaway from
February has been the strength of reporting and the strong outlook for profit
growth. This is positive as it underpins long-term share price returns and
gives us reassurance that we are on the right track. In that sense February
now looks a great source of opportunity and we look forward with confidence to
the rest of the year. 

(1)Source: BlackRock as at 28 February 2021

22 March 2021

ENDS

Latest information is available by typing www.blackrock.com/uk/thrg on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal).  Neither the contents of the Manager’s website nor the
contents of any website accessible from hyperlinks on the Manager’s website
(or any other website) is incorporated into, or forms part of, this
announcement.



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